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By Drew Clark for Intellectual Property Watch WASHINGTON, DC – Two recent court decisions against key United States internet companies – Google and eBay – are almost certain to reopen a long-standing truce between intellectual property rights-holders and website operators, over liability for the actions of users.

One decision required Google’s YouTube to disgorge huge quantities of individually-identifiable internet data about the video streams that its users watch. A procedural motion by the federal judge overseeing the mammoth copyright infringement lawsuit by Viacom International, the 2 July decision quickly sparked widespread outrage because of potential privacy implications for everyday web users.

The other decision, handed down on 30 June by a French court against web auctioneer eBay, required the company to pay a €40 million euro fine against Louis Vuitton for fake luxury goods sold on its websites. The French court decreed eBay’s anti-counterfeit measures inadequate, and also barred eBay from allowing the sale of four LVMH perfumes on its websites.

The decisions, taken in different contexts and deploying different legal standards, nevertheless demonstrate the strain under which a 1998 US copyright compromise has been placed.

That law, the Digital Millennium Copyright Act, generally allows web companies to be shielded from copyright liability for the actions of users – provided that they follow a strict set of “notice and takedown” procedures put in place by the law. With courts increasingly siding with copyright holders, US lawmakers might be pressured to reopen the law.

Other provisions of the DMCA have proven controversial internationally, including measuring banning technologies that circumvent encryption, which critics allege has stymied research. But the so-called “notice and takedown” procedures have been generally hailed as facilitating the widespread adoption of the internet.

Ironically, the next evolution of internet technologies referred to as “Web 2.0” relies ever-more-heavily on shielding the web host – in this case, a Google or an eBay – from initial responsibility for the actions of users. Allowing users to comment, edit, share and sell both digital and physical goods might well be jeopardised without such protections.

In the eBay case, the French court’s decision is not binding in the United States, and was publicly ridiculed by the Silicon Valley company. “We are going to fight this decision because it is totally ridiculous,” Alexandre Menais, the attorney in charge of eBay’s partnerships with rights owners, told Businessweek.

The company’s official statement was more measured, noting that the company “swiftly” takes down counterfeit offers that appear on its websites, and that it spends more than $20 million annually to fine and remove such goods. “It is clear that eBay has become a focal point for certain brand owners’ desire to exact ever greater control over e-commerce,” the company said last week.

That is the same message that Google sent when Viacom slammed its YouTube video-sharing service for copyright infringement with a $1 billion lawsuit in March 2007. The suit came one month after a massive DMCA take-down demand, and after Viacom had signed a content-sharing deal with Joost, a YouTube competitor. Convention wisdom held that Viacom pulled the trigger on the lawsuit when Google failed to offer a similar revenue-sharing deal with Viacom.

Now, the lawsuit is in a slow-motion legal process. In May 2008, Google laid out its legal strategy in court papers filed in the federal district court in New York.

“Viacom’s lawsuit challenges the protections of the DMCA that Congress enacted a decade ago to encourage the development of services like YouTube,” the company wrote. “Congress recognised that such services could not and would not exist if they faced liability for copyright infringement based on materials users uploaded to their services. It chose to immunize these services from copyright liability provided they are properly responsive to notices of alleged infringement from content owners.”

“YouTube fulfils Congress’s vision for the DMCA. YouTube also fulfils its end of the DMCA bargain, and indeed goes far beyond its legal obligations in assisting content owners to protect their works,” the company said.

Last week’s procedural motion raises the stakes of the lawsuit for average internet users. The decision involved the scope of the electronic “discovery” that Viacom may use in pursuing the suit.

Although Judge Louis Stanton did not grant every request made by Viacom, he did hold that YouTube needed to release “logging” data with the unique login identification and the internet address, for every time a video was shared.

Viacom said that it needs the data to compare whether YouTube improperly promoted copyright-infringing videos during the site’s meteoric rise. Judge Stanton agreed, and said that Viacom’s need for the data “outweighs the unquantified and unsubstantiated costs of producing that information.”

As for the privacy arguments proffered by Google and YouTube, Stanton said there was no precedent for excluding such data from a civil – as opposed to a criminal – proceeding.

“We are pleased the court put some limits on discovery,” Google said in the statement, “including refusing to allow Viacom to access users’ private videos and our search technology. We are disappointed the court granted Viacom’s overreaching demand for viewing history.”

And on the YouTube blog on 4 July, the company appeared to adopt a slightly more confrontational posture: “[S]ince IP addresses and usernames aren’t necessary to determine general viewing practises, our lawyers have asked their lawyers to let us remove that information before we hand over the data they’re seeking.”

The Electronic Frontier Foundation and other privacy groups also denounced the ruling, and claimed it was in violation of a law barring the disclosure of video rental and cable subscriber records.